KUALA LUMPUR: Sarawak Cable Bhd is acquiring one of its subcontractors to strengthen its transmission division, according to sources.

“The acquisition of this company will help Sarawak Cable in its bidding for more transmission projects,” said a source.

Sarawak Cable was suspended from trading last Friday pending a corporate announcement today. The shares were last traded at RM2.10 last Thursday.

The company is principally involved in the manufacturing of power cables, wires and conductors, steel fabrication and the installation and commissioning of transmission line projects.

Should the acquisition come to pass, this would be the second deal by Sarawak Cable in less than a year.

In October last year, it acquired Sarwaja Timur Sdn Bhd for RM28.9 million from Sarawak Energy and Syarikat SESCo Bhd via a mixture of shares and cash.

Sarwaja Timur is involved in the manufacturing, fabrication, galvanising and sale of steel structures.

Sarawak Cable cited the inclusion of contributions from its new subsidiary as the primary reason for its improved earnings in its first-quarter results. For 1QFY11, the company’s net profit increased to RM3.4 million versus RM917,000 in the previous year’s corresponding quarter.

Sarawak Cable also saw a similar jump in its top line, with revenue in 1QFY11 at RM83.7 million. In the previous year, the company’s turnover stood at RM26.6 million.

According the latest annual report, among the transmission projects that Sarawak Cable is currently undertaking are the RM164.9 million Engkilili-Entinggan transmission line and the Murum-Murum Junction transmission line worth RM98.6 million.

Sarawak Cable, which was listed for over a year, has been in the news recently as a result of its tie-up with ABB Malaysia Sdn Bhd. ABB is well known for its expertise in power and automation.

Both companies entered into a joint venture to bid for the Samajaya substation in Sarawak, which is to be implemented by the state’s power provider Sarawak Energy Bhd.

Sarawak Energy is Sarawak Cable’s largest shareholder with a 21.56% stake according to the latter’s latest annual report. Sarawak Cable’s other major shareholders are Datuk Seri Mahmud Abu Bekir Taib, who holds a direct 19.35% stake, and Leader Universal Holdings Bhd with 15.36%.

As a result of the tie-up with ABB, the company’s share price has climbed further to a record high of RM2.36 after the announcement was made on July 26.

This article appeared in The Edge Financial Daily, August 8, 2011.